I'm the founding partner of Proteus International, and author of Growing Great Employees, Being Strategic, and Leading So People Will Follow. You can follow me on Twitter @erikaandersen. My websites are erikaandersen.com, and www.proteus-international.com. I'm insatiably curious. I love figuring out how people, situations and objects work, and how they could work better: faster, smarter, deeper, with greater satisfaction, more affection, and a higher fun quotient.

Why Some Companies Break Through and Others Don't - in 6 Words

I love it when I read a blog post that changes my perspective or teaches me something useful. Chunka Mui, a contributor here at Forbes.com, has been writing a series of posts about Google‘s driverless car initiative. I just read Part 4, and while it contains lots of good and interesting reflection, the thing that hit me right between the eyes was something that seemed almost buried inside the post. Mui noted three rules for successful innovation that I just loved:

Think big

Start small

Learn fast

These are so awesome, I wish I’d thought of them! I especially love the important creative tension between “think big” and “start small.” I notice that – too often – people/companies that think big believe they have to start big, too. (“We’re going to change the way people watch TV – starting in 87 countries.”) And people who think small generally feel more comfortable starting small (“We’re going to tweak the payroll process, and we’ll try it out first in our smallest office.”) The first approach generally yields a train wreck (and gives innovation a bad name in the process), and the second approach yields…well, not much.

And then the third component – “learn fast” – is what allows you to go from small to big quickly enough to make a difference (and before competitors can catch up).

Zipcar is a great example. They thought big: change the nature of car rental in the US. They started small: founded in 2000, they opened just 3 offices in the first three years (Boston, then DC, then NY). They learned madly, modifying the offer, the brand, their systems. In 2005, they secured $10M in funding and got down to serious growth. They used the think big/start small/learn fast approach to build a solid company offering a truly different service and get to market ahead of the competition. Just weeks ago they were bought by Avis Budget Group for about $500M.

It works inside existing companies, as well. Anne Mulcahy’s turn-around of Xerox is a wonderful example. She thought very big: rather than just focusing on how not to go belly-up, she envisioned and encouraged her folks to envision a hugely successful Xerox. In fact, at one point, instead of creating a standard vision statement, she wrote and distributed a fictitious Wall Street journal article, describing the Xerox of the future in glowing and very specific terms. Then she started small…in this case the “smallness” was about where she focused on making the change: she got down into the business and worked with managers to take out cost where it wouldn’t hurt the business and put money where it was needed: not a massive “let’s take out 10% of budget across the board” effort, but in a very targeted and focused way. This, from an article on Mulcahy on the Stanford Business School website, describes her approach: “Through a “back to basics” approach and a renewed focus on operational efficiency, the company cut its capital expenditures by 50 percent; reduced its sales, general, and administrative expenses by one-third; and slashed its total debt in half. All the while, Xerox strengthened its core business by maintaining an organization-wide focus on innovation. “Even with all of the cost cutting we did, we didn’t take a dollar out of research and development,” Mulcahy said.”

And talk about learning fast: Mulchay spent most of her time during the first 90 days on planes and with employees and customers, connecting and listening. And she required her senior team to focus not just on making change, but on noticing whether that change was having the desired effect.

I suspect the think big/start small/learn fast mantra is great for making individual change as well. I’ll think more about it and (I’ll bet) dedicate another post to how that might work.

In the meantime, I’d really love to hear any examples you might have of the power of this approach…details, please!

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Erika- Another great and timely article. I really enjoy following them. Your fellow contributor’s 6 words for some companies “breaking through” and others not ring very true no matter what their size or what their product or service. Your dreams have to be big or you’ll never get anywhere. But if you start big, you’ll encounter the problems of a larger company and most likely won’t have the capital to support yourself. You will immediately assume the expenses of a larger firm and the “fat” that comes with it. By starting small, you can still have your large dreams but at the same time you can control your growth, build in expenses that are appropriate for your business and the revenue you generate (they will naturally grow as your revenue base grows), don’t overhire but hire creative people that don’t always necessarily think the same way you do. By putting yourself in this position, you, almost by default, will “learn fast”. As a former banker, I have found that female entrepreneurs are the best at this. They’re willing to take risks but they like to do it in an organized, well thought out manner. I’d rather finance a woman’s start-up because they understand the merit of listening and controlled growth. They also realize that controlled growth in the beginning can lead to big growth and big profits down the road. Again, great article, Erika.

Great article – super advice Chunk and Erika! Yet… I can’t help thinking about companies like LinkedIn and Home Depot, both of which did more than just think BIG, they put BIG plans in motion from the start. The difference between them and those of us who are still in the start up or “controlled growth” phase, is money, or rather the lack thereof. With funding you can hire the right team, without capital it’s like pushing a boulder up a mountain, you can’t get very far. Women in management positions, on boards, and in tech are making amazing strides – and many are proving to be engines of opportunity (read – company savers & job creators). Here’s to more serious investors ponying up capital for women-lead ventures, including our kick-butt for-profit social enterprise, womencentric.net!